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REVISION OF THE PACKAGE

TRAVEL DIRECTIVE Commission proposal (COM (2013)512

BEUC Position

Contact: Nuria Rodriguez – consumercontracts@beuc.eu

Ref.: X/2013/082 - 29/11/2013

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1 Proposal for a directive of 9 July 2013 of the European Parliament and of the Council on package

travel and assisted travel arrangements, amending Regulation EC 2006/2004, Directive 2011/83/EU and repealing Council Directive 90/314/EEC (COM (2013)512).

Summary

The new proposal adopted on 7 July 10131 provides for a few improvements but

also shows some important gaps and flaws, which need to be remedied in the

legislative process. In general we are concerned that due to the application of the

principle of full harmonization, national general contract law and national rules on

package travel, which represent a higher level of consumer protection than the level

in the reviewed Directive, would be precluded in many instances.

We thus advocate achieving increased approximation of the national laws through

this revision; yet the harmonisation should be based on a minimum approach,

with some exception of full harmonization where possible and necessary. By no

means should the level of protection in the current Directive be lowered.

Positive points of the proposal:

It extends the scope of the Package Travel Directive 90/314 to other travel

combinations, in particular tailor-made packages, certain dynamic packages and

certain online “click-through” combinations of travel services.

The obligation to guarantee the protection of pre-payments and passengers’

repatriation in case of the insolvency of the traders is extended to the new

category of “assisted travel arrangements”.

Some consumers’ rights when buying packages have been improved (e.g. the

right to cancel the package before departure, right to compensation for non-

material damage).

Points that need to be improved:

A number of shortcomings need to be addressed in order to ensure the Directive

fully addresses consumer detriment in the travel sector with a future-proof

approach and provides a truly level playing field in the market.

The Directive should in principle apply to packages, to assisted travel

arrangements and to standalone services offered for sale or sold by a

retailer or intermediary (other than the owner of the service), whereas not all

rules would apply to the latter two categories, but to the extent set out in the

respective provisions.

Packages and assisted travel arrangements covering a period of less than 24

hours as well as occasionally organised, should be included in the Directive,

not excluded as proposed.

The definition of package should include purchases made through linked on- line

booking processes where the booking data are transferred between the

different service providers, not only when the name or the credit card details are

transferred.

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The definition of package should apply irrespective of whether the sale is made

within the same booking process or within separate booking processes.

Retailers selling assisted travel arrangements and standalone services

should be obliged to provide the consumer with relevant information about the

service sold, confirm the bookings and be liable for any errors occurring in

the booking process.

Both the organiser and the retailer should be jointly liable vis-à-vis the

consumer for the performance of the “package” contract (joint liability).

No price increases should be allowed after the conclusion of the contract;

alternatively the price increase should be capped at 3% of the price of the

package and be notified at the latest 40 days before the date of departure; no

price increase should be allowed for late bookings (4 months before

departure).

In case of alteration of the contract conditions by the organizer, the

acceptance or refusal by the consumer should be explicit (not tacit).

The consumer should have the right to cancel the contract without paying

compensation for reasons of force majeure in the traveller’s private sphere

(e.g. illness, accident, death in the family).

The limitation of the obligation to provide care/assistance (to 3 nights of

accommodation and €100 per night) should be deleted.

The right to compensation should not be excluded if the consumer does not

notify a lack of conformity on the spot.

The prescription period for introducing claims in court should not be shorter

than 3 years (Member states being able to provide or maintain longer periods in

their laws).

The consumer should have the right to withdraw from a distance selling

contract within 48 hours after the booking.

In case of contracts concluded off-premises, a 14 day right of withdrawal

should be introduced as stipulated for package holidays in the doorstep

selling Directive (Directive 85/577/EEC).

-°-

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Background and market developments

Since the adoption of the current Package Travel Directive in 1990, the travel

market has profoundly changed. Consumer’s demands and expectations have

evolved and “alternative” business models appeared, in particular on line.

The first market developments relate to tailor-made packages2, as opposed to

pre-arranged packages3. The internet came soon afterwards and contributed most in

changing the features of the travel market4. Online agencies5, travel platforms6 and

airlines now offer many types of travel products including those displaying features

very similar to packages7, but not covered by the current Directive.

In 2000 the Court of Justice (in the Club Tour case8), ruled that tailor-made

packages are to be considered “packages” for the purposes of the Directive. Even if

this ruling referred to sales in a physical agency, it can be applied to some on line

sales although its adaptation to the on line environment raises many questions.9

Particularly in the on line sphere those are referred to as “dynamic packages.”

In 2009, a study assessing the consumer detriment in the market of “dynamic

packages”10 was published. This study estimated yearly consumer detriment for

users of dynamic packages to be €1065 million gross11. The study focused in

particular on airlines12, travel agencies13 and online platforms14.

In March 2009, a selection of BEUC members15 conducted an extensive survey on

travel and holidays. This survey showed that the problems consumers encounters

when they buy a traditional package are not statistically different from those arising

2 Tailor-made packages are generally defined as packages where the different components are put

together at the moment when the contract is concluded and following the specifications of the consumer.

3 Only 23% of the market relates to traditional pre-arranged packages, 23% relates to “combined travel arrangements”(dynamic packages”) and 54% involves independent travel arrangements by consumers: Impact Assessment accompanying the Commission proposal: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=SWD:2013:0263:FIN:EN:PDF

4 In the UK, traditional packages accounted only for 18% of the UK leisure market in 2007 compared to 46% in 2000 (Tui Travel).

5 E.g. E-dreams, e-bookers, Opodo, Rumbo, Voyages SNCF. 6 E.g.Booking.com. 7 The added value for consumers lies in particular on the greater flexibility and choice than in the

traditional package travel market; organisers of traditional packages can offer a limited number of options as their business model relies on a large number of consumers taking the same holiday so that they benefit from economies of scale when negotiating prices with the service providers.

8 ECJ C-400/00 (Club-Tour). 9 German Bundesgerichtshof judgment of 30 September 2010 in case Xa ZR 130/08, and the Dutch

Eerste Kamer Hoge Raad ruling of 11 June 2010 in case 08/04611, SGR vs ANVR. 10 London Economics, November 2009:

http://ec.europa.eu/consumers/rights/docs/study_consumer_detriment_dyna_packages_en.pdf 11 The scope of the study includes in particular the sale and purchase of on line travel products from the

same website and those purchased at different times and/or where the consumer receives separate billings from the different companies involved in the package. In the first case (single website) the study estimated consumer detriment at €88 million; in the second case (purchased at different times or billed from different companies) at €124 million and €237 million, respectively.

12 37% of consumers used airlines websites to book dynamic packages; 34% of problematic cases related to sales by airlines (figure 11 of the study).

13 29% of consumers booked dynamic packages through travel agencies (figure 45 of the study). 14 39% of consumers booked dynamic packages through Internet-only companies (figure 45 of the

study). 15 Test-Achats, OCU, Altroconsumo and DECO.

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from tailor-made packages or buying online service combinations. The survey also

pointed that even though new forms of selling and buying travel have emerged,

traditional holiday packages are still a very popular product among consumers in

some countries16.

General comments

In July 2013 the European Commission adopted a proposal for a revision of the

Package Travel Directive (1990/314/EEC). This revision was long overdue as the

current Directive was no longer adapted to the new market reality. Thus, the aim is

to adapt the legislative framework to developments in the travel market by covering

other products and business models deployed, particularly in the online

environment.

A characteristic of the travel market is the rapid pace of its development both in

terms of offers and as regards consumer’s expectations. On line travel agencies

(Expedia, Opodo, e-dreams etc.) airlines, internet platforms (Booking.com,

Tripadvisor…) and other intermediaries as search engines (e.g. Google, Bing), and

computer reservation systems (Sabre, Amadeus) have inter alia, all entered the

travel market at different levels and more developments are to be expected.

Consumer expectations also evolve accordingly. So the scope of any future Directive

needs to be as flexible and future proof as possible in order to ensure that the

directive will not be again obsolete soon after its adoption.

BEUC welcomes the proposal of the Commission in that it extends the protection of

travellers to travel combinations not covered by the current Directive especially

when using the internet, taking note of market developments and of case law in this

regard. Yet, we think that the approach taken by the Commission runs the risk of

not fulfilling the purpose of the revision because it is not fit to address a market in

continuous movement.

Yet, the proposed scope is overly detailed and narrow in its concept, thereby

potentially not “adaptable” to future developments in the market. The

proposal focuses on the business models traders decide to deploy rather than the

expectations of the consumer when buying travel products. In this regard, it is

important to underline that a package or a combination of different travel services

involves a series of services linked to each other for the same purposes of the

same trip or holiday. As various services are involved, a problem or a failure of

one service included in the package may affect the others.

The Commission proposal regulates two categories of travel combinations;

“packages” and “assisted travel arrangements” (ATAs). The organisers of

“packages” are liable for the performance of all the services included in the package

and are obliged to be insured against the occurrence of insolvency, while the sellers

of ATAs are only obliged to be insured against insolvency. We are concerned that

the (new) category of “ATAs” (Article 3.5) might well fit the demands of some

market actors, but in practice the distinction in definition between

“packages” and “ATAs” is not clear-cut and not comprehensible for

16 In Belgium and Portugal, 37% and 32% of consumers respectively buy traditional packages (i.e. pre-

arranged).

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consumers, nor probably for SMEs. In general the description of the scope is overly

complex and lacks clarity.

As a result, under the proposal, traders who currently sell dynamic packages

or even traditional packages could easily change their business model to

avoid the liabilities stipulated for sellers of “real” packages. Through offering

ATAs, a trader can benefit from offering a multitude of third party services through

its website, without any responsibility if non-compliance by these third parties. For

a consumer it looks like a package, generating expectations of consumer

protection, but in reality, it is not. This “flexibility” is even described as a necessity

for the market reported in the Impact Assessment17.

The lack of clarity and the difficulty to grasp the description of the proposed scope,

clashes with important aims of the proposal: namely to ensure transparency and

legal certainty. New travel products and business models in the market of travel

combinations make it almost impossible to determine whether the travel

arrangement which has been bought is protected or the kind of relationship or link

between different providers in the service chain18.

Yet consumers are increasingly moving away from the concept of package tours,

and closer to single services either directly booked or via other traders19. Hence, the

scope proposed by the Commission only covers a portion of common practice. In

this regard, we believe that the sale of stand-alone services via another trader

should at least be addressed in the proposal. Internet platforms and both off

and online travel agencies sell single services to consumers among their offers (see

comments below regarding the sale of single services through intermediaries).

Regarding the protection of consumers against insolvency, we welcome the fact

that the proposal aims to extend passenger protection against damages or loss as a

result of trader insolvency also to cover “ATAs”. The fact the consumer pays in

advance for services used at a later date fully justifies the obligation to ensure

protection against insolvency.

However, the proposal is unclear about fundamental aspects of this new element. In

particular Article 15.1 should be redrafted to clarify that both organisers of

“packages” and sellers of ATAs are obliged to be insured against insolvency

protection. Second, it is unclear which of the services sold would be secured against

the advent of insolvency. Only Recital 34 states that the protection extends to the

insolvency of any of the service providers in the chain. This statement should be

transferred to the operational section of the proposal (Article 15).

17 Impact Assessment accompanying the Commission proposal, page 144: Companies will be able to

adapt their business models so as to face only some requirements (insolvency protection and obligation to inform the consumer that he/she not protected as under a “package”). It is assumed that 25% of “one trader” “packages” and 50% of “multi-trader” packages will in the future be solve as “assisted travel arrangements”.

18 The study on consumer detriment of 2009, highlights the difficulty for consumers to understand the kind of travel products they buy (package, dynamic package, independent arrangement): “Consumers do not seem to have a good understanding of what constitutes a package and some of the consumers who have answered the survey might not have bought a dynamic package but rather a traditional travel package or independent travel arrangements” (study on consumer detriment in dynamic packages, page 74).

19 54 % of consumers, book travel combinations independently (Impact assessment accompanying the Commission’s proposal). In Belgium, 77% of consumers arrange their holidays independently on line, 75% in Italy, 74% in Portugal and 70% in Spain (Euroconsumers survey conducted in March 2013).

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Regarding airlines, we hold concerns that the European Commission is not pursuing

a coherent overall policy approach and that this results in inconsistencies and

market competition problems. We strongly support the idea that airlines be

required to offer insolvency protection when selling travel combinations

(including ATAs). However, in order to insure all consumers are treated equally and

there is a genuine level playing field in the market, airlines should also be

obliged to ensure their risk as regards seat-only passengers20.

What level of harmonisation?

In contrast to the current Package Travel Directive, the new proposal appears to be

based on a full harmonization approach which is highly problematic. Our

preliminary evaluation already shows that in many Member States the review as

proposed would reduce current national consumer protection standards,

particularly when it comes to the numerous contract law provisions which do not

offer strong protection and in relation to insolvency protection schemes.

Furthermore, the Commission proposal goes below the level of protection of the

current Directive 90/314 in some instances. We provide a series of examples

regarding potential reduction of consumer protection in the detailed comments

below.

Basic consumer rights – missing elements in a complex legal framework

Surprisingly the proposal does not stipulate a consumers’ right of withdrawal in

distance and off-premises purchases of “package travel” or an ATA. This is hard to

understand, because such a right was previously granted for package travellers in

the 1986 doorstep and 1993 distance selling21 Directives. Due to the merging of

these latter Directives into the 2011 Consumer Rights Directive (CRD) - which

excluded package travel services from its scope, in the end - , a right of withdrawal

needs to be re-established in the new Package Travel Directive to fill the obvious

and unjustified legislative gap. It is a particular problem in off-premises selling of

package tours.

Furthermore it is not clear why the ATAs are covered by the 2011 CRD22, while the

“package travel” is excluded except for a few specific provisions (see comments on

Articles 4 and 25 below). The CRD does not apply to passenger transport services

and therefore, an amendment of the CRD is needed to ensure that ATAs are covered

by it. Important elements, such as for example in relation to pre-contractual

information and formal requirements in case of off-premises and distance selling

shopping, are missing in the proposal.

Such an incoherent approach in the proposal leads to an even bigger patchwork of

consumer rights in relation to travel services, to a lack of transparency and

ultimately to confusion for both consumers and for business. Clearly, a more

20 The need for protecting air passengers against the insolvency of the airline was concluded in the

latest study on insolvency protection of airlines: http://ec.europa.eu/transport/themes/passengers/studies/doc/2011_03_passenger-rights-airline-insolvency.pdf

21 The 1986 Distance Selling Directive excluded contracts for transport, accommodation and leisure but did not specifically exclude package travel contracts; the Consumer Rights Directive (2011/83/EU) excludes both.

22 See article 25 of the proposal.

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appropriate option would have been to enact a travel services directive reflecting

and keeping pace with the variety of offers available in the market and the

increasing consumer trend to book independently travel services23. This would also

allow a more coherent framework for European travellers to be established.

-°-

CHAPTER I

SCOPE OF THE PROPOSAL

General comments

The aim of the new proposal is to extend the protection offered by the Package

Travel Directive to the sale and purchase of travel combinations not clearly covered

by the current Directive which are comparable to packages but generally now

offered on the travel market. Regulating “Dynamic Packages”24 and on line

combinations is the main objective25.

However in doing so the proposal creates two categories of travel

combinations: “packages” (Article 3 (2)) and “assisted travel arrangements”

(Article 3 (5)). The latter is a new category. Contrary to the organiser of packages,

the seller of ATAs will not be liable for the performance of the services included in

the “arrangement” and the consumer will not be able to exercise the particular

rights linked to traditional packages. However the sellers of ATAs are required to

provide sufficient security to cover the liabilities vis-à-vis the consumer (repatriation

and reimbursement) in case of insolvency affecting the services involved.

We think that the definition of “package” is too rigid and that the border line

between packages and “ATAs” is not clear cut. As a result, traders who sell

dynamic packages or even traditional packages could easily change their business

models to assisted travel arrangements. This is contrary to the aim of the Directive

to ensure a more transparent market for consumers. The lack of clarity in the

proposed directive could further undermine the already fragile level of consumer

knowledge of their rights in the travel market26.

23 See footnote 17. 24 See above for a definition of dynamic packages. 25 According to the abovementioned study on dynamic packages, some of those travel combinations are

more likely to fall under the provisions of the current Directive namely packages purchased from a single website. Others, on the contrary are said to be unlike to fall within its scope; those are packages where the elements are not purchased at the same time and/or for which the consumer receives separate billings from different companies.

26 In a survey carried out in April 2013, our member in the UK, Which?, found that only 1 in 3 consumers knew when holiday companies must provide an ATOL certificate (in the UK the ATOl certificate tells the consumer what protections they are getting with their purchase); 78% of those who said they knew, wrongly thought they would get an ATOL certificate when they booked a hotel room only from a website; two thirds said they should get ATOL protection if they bought a flight and accommodation from an airline website..

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Detailed comments

Article 2 of the proposal addresses the general scope and excludes certain contracts

from its scope27. The proposal applies to packages and partly to ATAs. BEUC

considers that some of the exclusions should be revised and at times deleted.

We do not see any reason for the exclusion of combinations covering a

period of less than 24 hours (see Article 2.2 (a)). As the duration is limited the

risk for the trader is lower and consumers may be confronted with as many

problems as with any other package. In addition, in some countries this limit does

not exist28 and the principle of full harmonisation entails that those laws will have to

be abolished. We therefore call for the deletion of this exclusion.

Regarding the exclusion of persons who occasionally organise packages, we

recommend deleting this exclusion completely by amending recital 19 of the

proposal29.

As regards business travellers (Articles 2 (c) and 3 (6).)30, we support the fact

that the proposal applies to business travellers and we also agree that some

major businesses could be excluded. However, we believe the exclusion of

packages negotiated on the basis of a framework contract should not apply

to NGOs and small businesses. This would be coherent with the Consumer’s Rights

Directive which allows Member States to apply the Directive on consumer Rights31 to

NGO’s, start-ups or small and medium-sized enterprises.32 Yet, by no means must

protection for consumers be lowered because of a broader definition of package

travellers as including business.

Article 2.2 (d) also excludes combinations where either transport, accommodation

or car rental is combined with other tourist services if the latter do not account

for a significant proportion of the package. We think that this exclusion carries a

27 Article 2.2 of the proposal: This Directive shall not apply to: (a) packages and assisted travel

arrangements covering a period of less than 24 hours unless overnight accommodation is included; (b) ancillary contracts covering financial services; (c) packages and assisted travel arrangements purchased on the basis of a framework contract between the traveller's employer and a trader specialising in the arrangement of business travel; (d) packages where not more than one travel service as referred to in points (a), (b), and (c) of Article 3(1) is combined with a travel service as referred to in point (d) of Article 3(1) if this service does not account for a significant proportion of the package; or (e) stand-alone contracts for a single travel service.

28 In Hungary and Austria for instance journeys of less than 24 hours are covered. Already in some countries (ex. Spain) it is increasingly frequent to offer combinations consisting of transport + dinner + tickets to attend a show or a sporting event, the whole service being performed in less than 24 hours without accommodation.

29 According to the Consumer Law Compendium, about two thirds of the member states have omitted to demand that the person has to act “other than occasionally”.

30 The proposal applies to business travellers unless their travel was bought on the basis of a framework agreement between the business and a trader specialized in business travel.

31 Directive 2011/83/EU of the European Parliament and of the Council of 25 October 2011 on consumer rights, amending Council Directive 93/13/EEC and Directive 1999/44/EC of the European Parliament and of the Council and repealing Council Directive 85/577/EEC and Directive 97/7/EC of the European Parliament and of the Council.

32 Recital 13 of the Consumers Rights Directive: “…Member States may therefore maintain or introduce national legislation corresponding to the provisions of this Directive, or certain of its provisions, in relation to contracts that fall outside the scope of this Directive. For instance, Member States may decide to extend the application of the rules of this Directive to legal persons or to natural persons who are not consumers within the meaning of this Directive, such as non-governmental organisations, start-ups or small and medium-sized enterprises”.

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deficit of legal certainty and by no means should the percentage of 20% mentioned

in the recital be applied, as the consumer has no means for verifying the percentage

covered by those services. This exclusion should be deleted.

Article 3 of the proposal includes the definitions of “travel service”, “package”33 and

“assisted travel arrangements” (ATAs)34. A “travel service” covers carriage of

passengers, accommodation other than for residential purposes, car rental and any

other tourist services not ancillary to transport, accommodation or car rental35.

Regarding any other tourist services, a reference to nutrition and means should be

added to Recital 1736.

Packages

The new definition of package includes a number of positive elements compared

to the current proposal:

The inclusion of tailor-made packages i.e. combinations put together

following the specifications of the consumer (Article 3.2(a)). This codifies the

Club Tour case law.

The clarification that combinations offered at an inclusive price or at a

total price are always considered “packages” (Article 3.2(b)(ii)); this should

include cases where the total price is the result of the aggregation of the

price of each component37.

The clarification that all combinations advertised or sold as packages, are

covered (Article 3.2(b)(iii)). This will protect consumers against misleading

practices.

33 A “Package” is defined as “the combination of at least two different types of travel services for the

purpose of the same trip or holiday, if: (a) those services are put together by one trader, including at the request or according to the selection of the traveller, before a contract on all services is concluded; or (b) irrespective of whether separate contracts are concluded with individual travel service providers, those services are: (i) purchased from a single point of sale within the same booking process, (ii) offered or charged at an inclusive or total price, (iii) advertised or sold under the term 'package' or under a similar term, (iv) combined after the conclusion of a contract by which a trader entitles the traveller to choose

among a selection of different types of travel services, or (v) purchased from separate traders through linked online booking processes where the traveller’s name or particulars needed to conclude a booking transaction are transferred between the traders at the latest when the booking of the first service is confirmed”.

34 “Assisted travel arrangements” are “combinations of at least two different types of travel services for the purpose of the same trip or holiday, not constituting a package, resulting in the conclusion of separate contracts with the individual travel service providers, if a retailer facilitates the combination: (a) on the basis of separate bookings on the occasion of a single visit or contact with the point of

sale; or (b) through the procurement of additional travel services from another trader in a targeted manner

through linked online booking processes at the latest when the booking of the first service is confirmed”.

35 Article 3.1 of the proposed Directive. 36 Recital 17: Other tourist services, such as admission to concerts, sport events, excursions or even

parks are services that, in combination with either carriage of passengers, accommodation and/or car rental, should be considered as capable of constituting a package or an assisted travel arrangement.

37 See judgment ECJ C-400/00 (Club-Tour).

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The inclusion of contracts which allow the consumer to choose among a

selection of services (after the conclusion of the contract). In particular

this category should include business models based on gift boxes.

Yet other parts in the new definition raise a number of questions. This is the

particular case as regards packages bought from a single point of sale within the

same booking process (Article 3.2(b)(i)) and packages purchased through linked on

line booking processes (Article 3.2(b)(v)).

Regarding packages bought from one single point of sale (Article 3.2(b)(i), the

purchase is considered as a package only if sold within the same booking process.

The reference to the same booking process does not exist in the current Directive

and this aspect was not addressed by the 2009 study on consumer detriment nor by

the Impact Assessment38. The current Directive also applies when separate billings

are involved39. In addition, the definition of package in the proposal (rightly) covers

combinations when different contracts are concluded with the individual service

providers (Article 3.2(b)). The proposal does not clarify the difference if any

between separate contracts and separate booking processes, or even separate

billings.

Yet the result of this artificial construction is that if the different elements are sold in

one booking process the combination is a package, but it will be an ATA if the

combination is sold within separate booking processes (according to Article 3.5 (a)).

This creates a situation of uncertainty which may be abused by (any) traders to limit

their liabilities by arguing that they sold the combination within different booking

processes. It should also be noted that the laws on package travel of some Member

States expressly cover sales within separate booking processes40.

Therefore, references to the same booking process and to separate booking

processes should be deleted.

Regarding on line “click-through” contracts (Article 3.2(b)(v)), the Commission

proposal is overly restrictive. According to the proposal, only if the traveller’s name

or particulars needed to conclude a booking transaction are transferred by the

organizer/seller to the subsequent service providers at the latest when the first

booking is confirmed, would the contract qualify as a package. Recital 18 states that

the notion of “particulars” only refers to credit card details or other information

needed to conclude a transaction; the transfer of the travel destination and/or the

travel times are insufficient41.

Even though this provision is bound to cover the sale of travel combinations

particularly by airlines, we believe that a number of business models currently

deployed by airlines are not captured by this criterion. First, by many airlines’

business models, the combination is often purchased from one trader (the airline)

38 The study only looked into the impact of Dynamic Packages involving one billing and separate

billings. 39 Article 2 of the Directive on Package Travel 90/314. 40 The Norwegian law for instance covers combinations of services linked to transport (hotel, car rental,

concerts…), even though the purchase is done in separate booking processes, as long as all the purchases is made during the one visit to the website.

41 Recital 18: “… Particulars needed to conclude a booking transaction relate to credit card details or other information necessary to obtain a payment. On the other hand, the mere transfer of particulars such as the travel destination or travel times should not be sufficient”.

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and not from the different separate traders involved. In such cases, it should be

specified that Article 3.2 b(i) also applies (purchases made from a single point of

sale). Moreover, transmission of the credit card details is not needed to offer/sell

additional services, but in most cases only the destination and the date of travel (if

at all) is sufficient to offer/sell those services. Finally, the requirement that the

transfer of the data has to occur at the latest when the booking of the first service

in confirmed introduces an overly restrictive and also artificial limitation.

In sum, it is our contention that within this approach it would be simple for the

trader to alter its business model in such a way that the credit card details are not

immediately transferred 42 and only transfer the information on the destination and

date of the travel at a later moment in time. Therefore, depending on how the

process of booking is construed, the contract could easily fall under the definition of

ATA (in Article 3.5 (b)) or even under another category not covered by the proposal.

In terms of transparency, it is a burden for the consumer to work out or prove their

details have been transferred and at what moment in time.

Therefore, BEUC proposes to delete the reference to the credit card details in the

Recital 18 and replace it with a reference to the booking data.

Moreover, a number of additional criteria revealing the “true” nature of what is

offered for sale to the consumer are needed. Other additional criteria should be:

- if the booking procedure creates the expectation on the consumer that they are

still in the sphere of the website of the first seller; or

- if the services offered are limited (e.g. the offer includes only a selection of car

rental companies)43; or

- if the different services are offered under ownership or control of the

organiser/retailer44.

Moreover, we understand that the different criteria in the new definition of packages

apply equally to both off and online contracts. The single reference to on line

booking processes (in article 3.2 (b) (v)) could be interpreted in the sense that the

previous criteria (points i, ii, iii and iv) only apply to off line contracts.

Therefore we recommend specifying that the definition of “package” applies to

all contracts, irrespective of the distribution channel.

It should also be clarified that the different criteria listed in Article 3.2(b) are

independent from each other namely each criterion alone has to be sufficient to

qualify the combination as a “package”. Thus, each criterion has to be separated by

“or” as a connecting word.

42 Article 3.2 (b) (v) applies if the “particulars” are transferred at the latest when the first booking is

confirmed. 43 This clearly indicates that the services are linked by some kind of commercial agreement. 44 Sometimes the trader/organiser also owns the services offered (e.g. Tui and Thomas Cook also own

an airline and hotels).

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Assisted Travel Arrangements” (ATAs)

According to the proposal, traders offering/selling ATAs 45 will not be liable for the

performance of the services bought in combination for the same holiday. Equally

sellers of assisted travel arrangements are not obliged to give any information to

consumers regarding the arrangement sold. The consumer is only supposed to be

informed by the trader who facilitates the purchase of the ATA about the fact that

the consumer is not as protected as they would be when buying a real package

holiday ( see article 17 of the proposed directive). The consumer will however be

protected against insolvency of the trader or the service providers and according to

Article 17 must be informed about this.

As explained above, the first category defined as ATAs (3.5 (a) is very similar (and

very hard to distinguish in practice) from the first category in the definition of

packages Article 3.2 (b) (i))46. This would mean that if the sale is made through a

single booking process the contract is a package whereas if there are separate

bookings involved it would be an ATA.

Yet, whether the bookings are processed through one booking or through

several bookings does not change anything for the consumer who is buying a

combination of services linked to each other as serving for the purpose of the same

travel. We underline that the current Directive of 1990 applies and protects the

consumer even if separate billings are involved and on the other hand the definition

of “package” in the proposal applies even if different contracts are concluded with

each of the service providers. And so it is not coherent to make the separation of

booking processes a decisive criteria for the categorisation of the combination.

The inclusion of the new category of ATAs, coupled with the proposed (restrictive)

definition of “packages”, allows excessive leeway to (any) traders (in

particular online) to change their business models in a way that offers no

or less protection (de-packaging) be it in the form of ATAs or in forms not covered

by the proposal at all in order to exclude their liability for the performance of the

services sold.

Sale of single services through an intermediary

Tour operators, travel agencies and other online platforms47 currently allow

consumers to buy stand-alone services (e.g. an air ticket, a hotel, an excursion)

through them48. Some air companies are also developing this type of service

(rather than offering combined services49).

45 Article 3.5 defines “assisted travel arrangements” as combinations of at least two travel services

resulting in the conclusion of different contracts sold by a retailer either a) on the basis of separate bookings on the occasion of a single visit to the point of sale; or b) through the procurement of additional travel services from a different trader in a targeted manner through linked on line booking processes at the latest when the booking of the first service in confirmed.

46 Note that the definition of packages includes scenarios where different contracts are concluded with individual services providers (Article 3.2 (b)).

47 E.bookers, e.dreams, voyages SNCF. 48 TUI, E.bookers, e.dreams, 49 Ryanair already develops a particular website as intermediary, selling hotel accommodation not

linked to transport: www.ryanairhotels.com

14

Yet, the Package Travel Directive does not apply in these cases as the object of the

contract is only one service. However, some Member States have extended the

scope of their laws on package travel to cover sales of standalone

services50. It is unclear whether those laws would have to be abolished due to the

application of the principle of full harmonisation.

Many of our members have reported problematic cases where the sale of a stand-

alone service was made through an intermediary51. We thus argue that there is a

need to establish certain obligations on the seller of those services.

Therefore, any intermediary or agency selling stand-alone products should

be subject to the following obligations:

- Provide all the information necessary on the characteristics and quality of the service sold (based on the list of information requirements of the Directive)

- Send confirmation of the booking/purchase to the consumer (the lack of confirmation indicating that the contract has not been concluded);

- Adequately complete the contractual transaction; the intermediary/agency

should be liable for any errors made when completing the transaction.

A legal lacuna in this regard will be easily exploited by traders in a market where

the trend is to increasingly develop sales of stand-alone services by third parties

and were consumers tend to organise their travel independently.

-°-

CHAPTER II

Information obligations and content of the contract (Articles 4 to 6)

Article 4 of the proposed Directive establishes a list of pre-contractual information

obligations for the organiser and the retailer of a package travel contract.

50 E.g. Belgium, Norway, Germany. According to the Belgian law (16 February 1994) transposing the

package travel directive, any intermediary offering stand-alone services has a number of (information) obligations vis-à-vis the consumer; it is also liable for the fulfilment of the contract concluded; it also has an responsibility of diligence and is obliged to provide assistance to the passenger in difficulty. In Germany, case law applies all the rules on package travel also to different standalone service like the rent of holiday homes.

51 July 2012: A consumer booked a flight from Innsbruck via Frankfurt and the USA to Peru in an Austrian travel agency. The travel agency did not inform the passenger that he had to register on line for a stay in USA (ESTA) even though it was only for transit. In Frankfurt she was required to present such registration (too close before departure of her flight) but she could not register anymore. Consequently she was denied boarding and lost about € 700 for the ticket. She went back home from Frankfurt to Innsbruck with a new ticket for about € 300,00. She had to get to Peru within one week to start a summer holiday-job, but tickets to Peru now were only available from € 2.000.-. So the consumer was confronted with a damage of about € 3.000.

15

We welcome that both the organizer and retailer are bound by the

obligation to provide the information. However, it is not justifiable why none of

these obligations apply to the sellers of ATAs; some of the obligations of Articles 4

and 5 should also be provided by retailers of ATAs (see below).

Regarding the list of information requirements52 we note that certain important

items of information are omitted which are of relevance in the context of a travel

contract. The following information should be added:

- the period of stay should include the number of nights;

- information on the method of calculating costs which cannot be given in

advance53 including the eventual price increase after the conclusion of the

contract;

- information on the means and timescale for redress (complaints handling,

alternative dispute resolution) in case of problems;

- information regarding risks arising from natural disasters, public health, public

order and other interruptive sources;

- meaningful information on the category of the accommodation54; for trips in

foreign countries the specific hotel should be named so that the consumer can

do his own research before booking;

- accurate descriptions of the services available at the place of destination;

- information of any circumstance which could complicate the accomplishment of

the services purchased (e.g. works outside or nearby the hotel, an air

conditioning plant in from of the balcony, facilities in bad condition or out of

service)55; and

- information about the type, goal and target group of the holiday;

- information on the absence or existence of a right of withdrawal56 (the right of

withdrawal needs to be re-introduced, see our comments below) and where

applicable the conditions, time-limit and procedures for exercising that right57;

- information on the insolvency protection and liability insurance of the tour

operator.

Moreover, it should be explicitly stated that the information regarding visa

requirements also covers consumers from other Member States58. Also, the

information about visa requirements should not be changed without informing the

52 22% of consumers are provided with incorrect or incomplete information (study on consumer

detriment, 2009, London Economics). 53 The Consumer Rights Directive provides for this information obligation. 54 There is no EU wide o international hotel categorisation and so the quality of the service may vary

from country to country. 55 Which? (UK) conducted a research in 2006 about brochure accuracy which concluded that tour

operators’ brochures can be “disingenuously economical with the truth”. ABTA’s (Association of British travel agents) standards on brochures document, which sets out standards in the information that tour operators should apply in their brochures was not being met.

56 This is provided for in the Consumer Rights Directive (Article 6.1 h)). 57 Articles 6.1 h) of the Consumers Rights Directive. 58 Some tour operators interpret this obligation narrowly. Hence, they only provide information on

identification and visa requirements, which apply to nationals of the country where the tour operator is based.

16

consumer before the conclusion of the contract (Article 5.1 should not exclude

information on visa requirements).

Regarding the formal requirements to provide the information (Articles 4.2 and

6.3), it should be added that the trader must give this information on a durable

medium and be legible; as regards off-premises contracts the information

should be given on paper59. Concerning the language of the contract, it should

be added that the language of the contract has to be the same as that in the

pre-contractual information60. In addition, in accordance with the consumers

Rights Directive (CRD), if the contract is concluded by telephone, the trader should

confirm the offer to the consumer on a durable medium and the consumer should

only be bound when they sign and/or send their written agreement to the offer61.

Most importantly if the category of ATAs is maintained, the formality of the

information must include a clear and unequivocal text (e.g. “with me, you are

not protected”, I am not responsible in case of problems”). This text should be

standardised in an information sheet that the trader should give to the

consumer.

Some specific sanctions for the non-fulfilment of the information obligations

should be established although Member states should also be allowed to retain their

specific provisions on this issue:

- if the right of withdrawal exists but the consumer was not informed of it, the

consumer should be able to cancel free of charge;

- if the consumer was not informed of the price increase or of any additional

costs, those costs are not due by the consumer62;

- in the case of ATAs (article 17.b) when the trader offers vague, insufficient or

no information on the level of protection he offers, full protection applies.

Finally, it should be added that the burden of proof that all the information was

correctly provided should rest with the seller.

In order to improve the visibility and the exercise of certain consumers’ rights, the

new Directive should include annexes with model forms (e.g. cancellation, transfer

of the package, complaints). These annexes could be used as a check-list

concerning the essential information and contract elements, of which the consumer

is not always aware when booking a holiday.

Regarding retailers of ATAs, article 25 implies that the information requirements

(and other formalities in relation to distance and off premises contracts) of the CRD,

apply to retailers of ATA’s. Yet, the Consumers Rights Directive fully excludes from

its scope all contracts in the transport sector. Therefore, the new directive should

amend the CRD in order to include retailers of ATAs in its scope.

The information requirements and the formalities of the CRS (Articles 5, 6, 7, 8 and

9) should apply to ATAs irrespective of the type of retailer (airline, online platform

59 Article 7.1 of the Consumer Rights Directive. 60 Member States should be able to maintain language requirements (article 6.7 of the Consumers

Rights Directive). 61 Article 8.6 of the Consumer Rights Directive. 62 Article 6.6 of the Consumer Rights Directive.

17

or travel agency). Moreover, the following number of additional information items

specific to the transport sector should be given by retailer of ATA’s:

- In so far as transport is included, general information on passport and visa

requirements, including approximate periods for obtaining visas, for nationals of

the all the Member State(s) concerned and information on health formalities;

- Information regarding risks arising from natural disasters, public health, public

order and other interruptive sources.

- Information on the retailer’s complaint handling policy and on the available out-

of-court dispute resolution mechanisms.

-°-

CHAPTER III

Transfer of the contract to another traveller (Article 7)

As with the current Directive, the proposal allows the consumer to transfer the

contract of package to another consumer. In the new proposal however, the

consumer can only give notification of the transfer to the organiser, not to the

retailer. The current Directive leaves discretion to the consumer to choose between

the organiser and the retailer. Even though we understand the coherence of the

proposal with the proposed sole liability of the organiser, we believe that the

consumer should be allowed to signal to either the organiser or the retailer their

intention to transfer the package.

Alteration of the price after the conclusion of the contract (Article 8)

Article 8 of the proposal allows organisers to alter the price of the package after the

conclusion of the contract if the increase concerns fuel and taxes or fees imposed by

third parties and under the condition that consumers can also benefit from price

reductions.

The possibility to increase the price already exists in the current Directive. The

proposal however limits the increase to no more than 10% of the price of the

package.

BEUC certainly welcomes that cap on price increases. Yet the limit of 10% is

too high as it will represent a disproportionate burden on the consumer especially

where the cost of the package is high or where there are many participants

connected to one package, like families (each member paying the additional 10%).

In particular several national legislations who allow prices to be increased have

established a percentage lower than 10%63. In other countries the increase is not

allowed at all or the consumer can cancel the contract following an increase64, while

in others no increases can be imposed for bookings within 2 months from

63 For example 5% in Bulgaria and Germany; 2% in Cyprus. 64 E.g. Germany and Slovenia (Consumer Law Compendium).

18

departure65. Due to the proposal’s full harmonisation nature the impact would be

that consumers in those Member States would lose the better provisions in this

regard.

The proposal also establishes that price increases are allowed only if the organiser

passes eventual price reductions on to consumers (in taxes, fees and fuel costs).

This additional condition is in theory positive. However, we are concerned that the

possibility to benefit from price reductions would never materialise in practice not

only because the organiser would be reluctant to reveal this to the traveller but also

because providing proof of a decrease in taxes or fees is often too burdensome. We

are also concerned that a clause allowing for price increases which requires

decreases at the same time, would probably be upheld as fair by the courts

because it is more balanced, while in reality price reductions will never be passed

onto consumers.

Moreover, BEUC considers that in the context of market developments in recent

years the right to increase prices in the travel market is unjustified mainly for the

following reasons:

- classic travel brochures have been largely replaced by flexible virtual offers;

- prices fluctuate more and constantly updated with “fluid pricing” techniques;

- the limited risk of sudden price variations is covered by traders using different

techniques like “yield management”66 and “hedging67” which enable traders to

effectively manage the risk without having to raise prices.

Therefore, BEUC opposes allowing price increases after the contract is

concluded. Should this option not be accepted, the following conditions should

apply to price increases:

- the percentage allowed should be capped at 3% of the holiday price; if the

trader passes on to the consumer a higher increase, the consumer should have

the right to withdraw from the contract.

- the period within which the increase should be notified should not be shorter

than 40 days or 30 days maximum (20 days as proposed by the Commission

is too short a period to change the conditions of the contract)68;

- no price increases should be allowed for late bookings (4 months before

departure);

- moreover, it should be required that the criteria for price alterations

calculations, for example in case of fuel costs increases, are already indicated

in the contract terms and conditions. This kind of information helps the

65 In Austria if the booking and the departure take place within 2 months no increase can be passed on

to the consumer; in Germany only contracts which have been concluded more than 4 months before the travel can be subject of a price alteration.

66 Yield management is a variable pricing strategy, based on understanding, anticipating and influencing consumer behaviour in order to maximise revenue or profits from a fixed, perishable resource (such as airline seats or hotel room reservations or advertising inventory). As a specific, inventory-focused branch of revenue management, yield management involves strategic control of inventory to sell it to the right customer at the right time for the right price (Wikipedia)

67 Hedging is a risk management strategy used in limiting or offsetting probability of loss from fluctuations in the prices of commodities, currencies, or securities. In effect, hedging is a transfer of risk without buying insurance policies http://www.businessdictionary.com).

68 The laws of France and UK provide for a 30 day limit (Consumer Law Compendium).

19

consumer to understand price increases but also to make use of their right of

price decreases.

Alterations to other contract terms before departure (Article 9)

Article 9 addresses the issue of unilateral changes to contract conditions other

than the price. It includes a new element compared to the current Directive,

namely the distinction between insignificant and significant changes.

Paragraph 1 prohibits the unilateral alteration of the contract terms before

departure unless the organiser reserves that right in the contract, the change is

insignificant and the organiser informs the passengers of this fact. This provision is

a new element which is not included in the current Directive which we believe does

not have any added value; general contact law should apply to contract changes

and in particular the Unfair Contract Terms Directive69. Thus, this paragraph should

be deleted.

Paragraph 2 allows the organiser to significantly change any of the main

characteristics of the contract before departure if he is constrained to do so. This

is an instance already included in the current Directive but the proposal altered

somehow to the existing wording. The new wording reduces the level of

protection for the consumer compared to the current Directive (Article 4.5 of

the current Directive) in which the rights of the consumer following a significant

change by the organiser are stronger and clearer. In particular, the proposal does

not clearly grant the consumer the right to be offered a package of equivalent,

lower70 or higher quality instead of terminating the contract71.

In addition, the proposal (unlike the current Directive) stipulates that a consumer

gives tacit acceptance to the contract alterations if they do not terminate it within

a given time after being informed of the changes. Such an agreement should be

under the condition of explicit consent, not silent acceptance72.

Regarding the right to compensation following significant changes (Paragraph

4), some Member States establish specific compensation duties. In the Czech

Republic the organiser has to pay 20% of the price of the package if the organiser

cancels less than 20 days before departure.

Moreover, we think that both the existing Directive and the proposal go too far in

allowing significant contractual changes to occur before the travel. In some

national laws (e.g. Austria, Germany) significant changes are as a general rule

prohibited unless those changes are for example factually necessary and do not

cause a significant inconvenience to the passenger.

Therefore, the directive should be very restrictive in allowing for significant changes.

This should only be possible if they do not cause inconvenience to the consumer

69 Point (j) of the Annex of the Unfair Contract Terms Directive: “Enabling the seller or supplier to alter

the terms of the contract unilaterally without a valid reason which is specified in the contract”. 70 In which case the consumer is refunded of the difference (Article 4.6 of the Package Travel

Directive). 71 In most of the Member States, the consumer has the right to be offered another package of higher of

lower quality (see Consumer Law Compendium). 72 Portuguese law even demands the acceptance of the consumer to be in writing.

20

and are fair and reasonable. Acceptance by the consumer of the changes should be

explicit and the consumer should be offered the possibility to contract another

package of equivalent, lower or higher quality instead. Moreover, if the new package

is of lower quality, the consumer should be informed of the price reduction that

he/she will be granted if he/she accepts the alternative.

Termination of the contract before the start of the travel (Article 10)

The proposal stipulates a general right of the passenger to terminate the contract

before the start of the package by paying appropriate compensation to the organiser

(Article 10.1). We welcome that a traveller can terminate the contract

without cost if extraordinary circumstances arise at the point of destination

before the departure (Article 10.2). However, in both cases the proposed rules need

improvement.

Regarding the general right to terminate the contract against compensation,

we support the rule that the standardised termination fees should be based on the

time of cancellation minus the savings and the income made by the organiser from

alternative deployment of the services. However, in the absence of standardised

termination fees the proposal only subtracts the savings made by the organiser, it

omits the income made from alternative deployment of the services. Thus the

income from deployment of alternative services should be added. Besides, the

compensation should not include disproportionate or excessive administrative fees73.

As regards the right to cancel following extraordinary events at the place of

destination, we believe that the list of such events in Recital 26 should include not

only warfare and natural disasters but also in particular terrorism, hurricanes,

earthquakes and political instability. Moreover, the risk of such events taking

place should be sufficient to trigger the right to cancel74 by the consumer but in

particular when national authorities publish warnings in relation to such risks.

Moreover the requirements that the incident needs to occur at “at the place of

destination or in its immediate vicinity” and that it has to “significantly affect” the

package, are too restrictive. It should be left to case law to decide when a risk

justifies the termination of the contract.

Regarding the right of the organiser to cancel the package if the minimum

number of persons required is not reached, we are not satisfied that this is

maintained in the new proposal. Due to the different features now governing the

travel market compared to 20 years ago when the Directive was adopted, this right

may no longer be justified. Currently technology allows traders to easily foresee and

manage the risks involved in their offers and operations. Moreover, traders could

73 Our German member VZBV has won two court cases against tour operators that charge excessive

fees for cancellation rights: see press release: http://www.vzbv.de/12404.htm 74 In particular German and Austrian case law interpret the law in this sense: OGH( Austria)

27.11.2001, 1 Ob 257/01b: the consumers cancelled a journey to Turkey because of terrorist attacks, there was a note by the Ministry that there is a risk, there was no “warning” but there where media reports alerting of the danger; the High Court decided that the consumers had the right to cancel; OGH (Austria) 26.08.2004, 6 Ob 145/04y: consumers cancel their trip to New York and Chicago on 15.09.2001 as they were insecure about risks and restrictions following the terrorist attacks; there was no “warning” by the Ministry but The High Court accepted the cancellation; HG Wien 07.09.2004, 1 R 136/04b: Cancellation of a journey to Burma, China and Thailand due to the SARS-epidemics, no official “warning” but only various risk-notes, also by WHO; The Court decided the consumers had the right to cancel.

21

easily abuse this rule as it is not possible for consumer to verify the truthfulness of

the number of passengers. In case this right of the organiser is maintained, the

timeline of 20 days should be replaced by 40 days or maximum 30 days before

departure and a duty of the organiser to provide evidence and to compensate the

consumer75 should be required. The information obligation in this regard should be

changed accordingly.

On the other hand, the proposal does not allow the consumer to cancel the package

without having to pay compensation following an event of force majeure

(extraordinary circumstances) of the traveller (e.g. illness, accident, death in the

family). We argue that allowing the organiser to cancel the package for reasons of

force majeure76, but excluding this possibility for the consumer is unfair results in an

imbalance between the rights and obligations of the parties due to the lack of

reciprocity. Thus, the Directive should grant the consumer the same right to cancel

the contract following extraordinary circumstances of the consumer (e.g. illness,

accident, death in the family77).

-°-

CHAPTER IV

Liability for the performance of the package (Article 11)

Article 11 of the Commission proposal places the liability for the performance of the

contract package, solely on the organiser78. Thus the retailer is not liable vis-à-vis

the consumer though the consumer would be allowed to send complaints to the

organiser through the retailer (Article 13 of the proposal).

The current Directive left discretion to Member States to decide who the organiser

or the retailer is liable vis-à-vis the consumer. Therefore, according to different

national traditions some national laws diverge on this issue79.

The liability system foreseen in the current Directive was conceived to fit

the market features at the time of its adoption. Then, the organisers of

packages were tour operators who grouped tourist services together in a package;

retailers were travel agents who would sell packages put together by the organiser.

However, this clear distinction has become somewhat blurred as more and more

personalised holidays are put together by travel agents and online travel sites and

platforms.

75 Since some popular packages are sold out very early before the holiday season begins, it is often

difficult for the consumer to find a suitable substitute package. 76 Article 10.3 (b) of the proposal. 77 See suggestions of the Round Table organised by the Commission in 2001 and § 651j of the German

Civil Code. 78 Article 3.8 of the proposal: 'organiser' means a trader who combines and sells or offers for sale

packages, either directly or through another trader or together with another trader. 79 The law of the majority of Member States provides for a different and separate liability of the

organiser and the retailer; in other countries only the organizer or only the retailer is liable vis-à-vis the consumer, and in others both the organiser and the retailer are jointly liable vis-à-vis the consumer.

22

In fact, in some Member States travel agents act as organisers while others are

retailers in the strict sense. In the case Club-Tour the CJEU ruled that the term

“organiser” does not only cover the typical tour organisers, which sell pre-arranged

packages via travel agencies and other retailers, but also travel agencies or

internet platforms which spontaneously combine, at the specific request of the

consumer, several tourist services such as flights and hotel accommodation (offered

by other service providers)80.

Therefore, the new proposal should clarify that travel agents (off or on line) and

other retailers which in practice combine different services independently, are to

be considered organisers.

BEUC supports the underlying idea of the Commission proposal to ensure clarity and

legal certainty as regards the liability for performance. However, this should not be

at the expenses of consumer protection and consumer expectations. Both aspects

should be combined. The reality is that consumers are often confused as to who

is who in the contractual chain, all the more in a situation where many more

different traders have entered the market over the last years (e.g. airlines, on line

platforms). As a matter of fact, many consumers identify the seller as being the

party whom they should refer to in case of problems; it is straightforward for them

to identify that party.81 In many Members States the liability is placed on the

retailer for this very reason82.

Putting the liability only on one party would complicate the application and use of

the consumers’ rights83, in particular as regards cross-border purchases i.e. when

the organiser is not established in the country of residence of the consumer.

We believe that the proposal of the Commission allowing the consumer to contact

the organizer through the retailer (Article 1384) would not ensure transparency and

could result in adding a layer of complexity and be a source of disagreement

between the retailer and the organizer.

Consequently, BEUC calls for a system where the organiser and the retailer are

jointly liable vis-à-vis the consumer (joint liability). The party who compensates

the consumer would have a right of regress against the party ultimate liable. If

only the liability of the organizer is maintained, at the very least the proposal

80 See also case C-237/97, AFS Intercultural. 81 50% of consumers having problems with dynamic packages complaint to the seller (London

Economics study, page 64). 82 45% of package travels in the EU are sold through a travel agency (Commission Impact Assessment

accompanying the proposal, page 107). 83 In the case BEST TOURS83, a group of consumers from Luxemburg had booked a (expensive)

package travel organised by the Belgian tour operator BEST TOURS, via a travel agency in Luxemburg. The travel agency in Luxemburg went bankrupt and the tour operator refused to compensate the consumers by rejecting its liability. BEST TOURS sent a message to the consumers stating that the travel agency had gone bankrupt and that BEST TOURS had not received the deposits that the travel agency should have paid. It went on saying that BEST TOURS had not concluded any contract with the consumers and that the affected consumers should have recourse to the retailer (travel agency)

84 Article 13: Member States shall ensure that the traveller may address messages, complaints or claims in relation to the performance of the package directly to the retailer through which it was purchased. The retailer shall forward those messages, complaints or claims to the organiser without undue delay. For the purpose of compliance with time-limits or prescription periods, receipt of the notifications by the retailer shall be considered as receipt by the organiser.

23

should state that when the organiser is established in a different Member

State from the consumer, the retailer is to be considered the organiser85.

The principle of joint liability is already present at different degrees in many

member states including Belgium, Bulgaria, Denmark, Greece, Hungary,

Luxemburg, Lithuania, Malta, Norway, Portugal, Romania, Slovakia and Sweden86.

Our comments on article 11 to 14 therefore jointly apply to the organiser and the

retailer.

Articles 11 and 12 put forward a regulatory system addressing the extent of the

organiser’s liability following a lack of conformity. The main elements of the

proposed liability system are already present in the current Directive. Yet, this

proposal is based on the principle of full harmonisation and therefore the national

systems regulating lack of conformity for services will be strongly affected.

It has to be taken into account that there is no EU harmonisation of the law on

the lack of conformity for service contracts. Thus the proposal reaches far into

national civil law and would preclude better national standards in this field. This is

unacceptable from a consumer policy perspective. In particular the rules on the lack

of conformity of the travel service can only be stipulated on a minimum

harmonisation basis.

In addition, the proposed regulation weakens the level of protection in the current

Directive in relation to some elements.

Paragraph 2 of Article 11 states that the organiser shall remedy the lack of

conformity unless this is disproportionate. This limitation of liability does not

exist in the current directive. It could be read as allowing the organiser to exclude

any liability completely if he argues that remedying the lack of conformity is

disproportionate. In many cases if one remedy is disproportionate, others can apply

such as the reduction of the price, or compensation. This part of the sentence is not

meaningful and should be deleted.

Article 11 also deals with the consequences of a lack of conformity after

departure. The proposal introduces some restrictions to the rights of the

consumer compared to the current Directive. In the proposal, when a “significant

proportion” of the services cannot be provided, and the organiser cannot offer

suitable arrangements of comparable quality, the consumer can (only) withdraw

from the contract. The current Directive allows the consumer to reject the

alternative arrangements for good reasons. In many Member States, such a

restriction does not exist and therefore this rule would lower standards of protection

at national level.

In any case, the proposed changes raise the questions of how to define “significant

proportion” and “comparability” of the arrangements and whether more favourable

national systems are affected due to the principle of full harmonisation. The fact

that according to the proposed rules, in case of lack of comparability of the

alternative arrangements, the consumer could no longer terminate the contract is

85 E.g. in Hungary and in Holland, a retailer who sells packages of a foreign organiser is liable as if it

was the organiser of the package. 86 See also the Impact Assessment accompanying the Commission proposal.

24

problematic in light of better national regimes. In Austria for example, if a

comparable arrangement is offered, this change must also be convenient to the

consumer following his/her specific needs, if not the consumer can withdraw87. At

the very least consumer expectations have to be considered when defining

“significant proportion” and assessing the “comparability” concept.

Paragraph 5 includes a new limitation of the general obligation of care of

organisers; the current Directive does not allow such limitation. If the package

involves travel and this cannot take place due to extraordinary circumstances, at

the time and in the conditions agreed, the proposal allows the organiser to limit his

obligation of care to 3 nights of accommodation and €100 per night. BEUC

strongly opposes this rule which is also included in the proposal for amending

Regulation 261/0488.

We claim that this exoneration runs counter to the general obligation of care and

assistance of the organiser and that it has not been subject to an impact

assessment in the context of package travel. Our disapproval of this limitation in the

context of the revision of Regulation 261/04, becomes all the more pertinent when

it comes to package travel contracts and other travel combinations. The very nature

of travel combinations, as necessarily providing added value compared to other

travel products, renders the obligation more relevant in terms of meeting

consumers’ expectations.

Price reduction and compensation for damages (Article 12)

If the organiser fails to perform the package as agreed, the lack of conformity

should be remedied by compensating the consumer and/or allowing a reduction in

its price.

We welcome the explicit inclusion of non-material damage in the scope of

compensation, reflecting existing case law89.

However, the possibility of the organiser to exempt his liability by proving that he is

not at fault (paragraph 3 of Article 12) would, in combination with the principle of

full harmonisation, impact negatively in the laws of some Member States. The

proposal surprisingly treats the fault based compensation and the remedy of price

reduction in case of lack of conformity – which is typically not fault, based, but

prompts a strict liability of the trader – by the same regime. Consequently serious

negative consequences for consumers would occur. 90 It is unacceptable that the

organiser is only liable for performance in case of fault, but for none or poor

performance due to extraordinary circumstances or the fault of 3rd parties the

consumer would not have a right to price reduction. The current principle of

minimum harmonisation must remain on this issue rather than full

87 If for example contractually agreed childcare cannot be provided, this service does not represent a

significant part of the journey; however, from the point of view of the traveller it is an essential part. 88 Regulation (EC) no 261/2004 of the European parliament and of the Council of 11 February 2004

establishing common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of flights.

89 Case C-168/00, judgment of 12 March 2000 (Simone Leitner). 90 E. g. Luxemburg. Germany, Austria. According to German law the right of the consumer to require a

price reduction does not depend on the fault of the seller.

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harmonisation, in order to preserve the level of protection applicable in those

Member States.

Regarding consumer complaints, the right of the consumer to be compensated

for a lack of conformity must not be jeopardised by conditioning it with the

obligation of the consumer to report any lack of conformity “on the spot". The

sanction to lose all rights in case of not fulfilling the duty to notify is not

proportionate and doesn’t exist in any other EU consumer legislation. Anyhow it is

always in the interest of the consumer to notify as to a lack of conformity and most

consumers naturally do it as soon as possible as they have a strong interest in

changing the situation to the better. Yet, sanctioning a lack of notification by the

consumer by excluding compensation is unfair and disproportionate and goes

against the general right to compensation for lack of conformity. This will result in

an unfair treatment of many consumers in certain circumstances91.

The limitation does not exist in the current Directive and thus it will entail a

significant reduction of the existing level of protection. Therefore we call for the

deletion of paragraph 3.b of Article 12.

Moreover, regarding paragraph 4, the possibility to limit compensation for

damages in the contract does not exist in some Member States92. The principle of

full harmonisation will again entail that better national laws will have to be

abolished.

Regarding the prescription periods for legal actions, we believe that a minimum

period of 1 year (Article 12.6) is not sufficient. It should be stated that the

prescription period shall not be shorter than 3 years, with Member States being

free to provide for longer periods. Moreover, it should be stated that national

prescription periods are rules of mandatory law which the consumer can invoke

in cross-border complaints93, by applying the law of their domicile if it provides

better protection in relation to those periods94. It should also be stated that any

prescription period is to be suspended or interrupted while an amicable solution

or ADR procedure has been initiated until the end of the settlement or if no

settlement is reached.

Obligation to provide assistance (Article 14)

Article 14 is a new provision exclusively dealing with the obligation of the organiser

to provide assistance to the consumer in difficulty. However, it is unclear when

this obligation is triggered and the extent of it. It should at least be possible

for the consumer to be assisted with no extra costs when the fault of the organiser

is involved.

91 The consumer could be prevented from reporting a lack of conformity on the spot due to a number of

reasons (no availability of internet connection, remote area, the organizer representative being unreachable…).

92 France, Hungary, Latvia, Spain and Sweden: see Consumer Law Compendium. 93 Case « BEST TOURS »: Ruling of the Cour de Cassation (Luxemburg) of 17 December 2009: The

main issue was whether the prescription period of Luxemburg law (which was longer than in Belgium) is to be considered a mandatory provision which would then take precedence over the applicable law with the aim to ensure the effect utile of the Directive on Package Travel.

94 Contractual conditions generally impose the law of the country of residence of the organiser/ seller and the rules on national applicable law are not always applied by the competent court.

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CHAPTER V

Insolvency protection (Article 15)

The Commission proposal extends the insolvency protection obligation beyond

traditional packages, by placing this obligation on traders selling ATAs also. In

addition, the extended definition of package contracts (covering dynamic packages)

entails that the new products covered by the scope of packages will clearly benefit

from the insolvency protection as well. This extension is to be welcomed. The

fact that the consumer pays in advance for services to be used later in time, fully

justifies the protection against insolvency.

Moreover, the wording of Article 15 does not clarify if and to what extent the

insolvency of the providers of additional services, is covered by the protection or

even which of the implicated traders has to be ensured against insolvency. By

reading Recital 34 we understand that only the organiser of packages and the seller

of assisted travel arrangements are obliged to be ensured against their own

insolvency but also against that of any of the service providers in the chain95 (e.g.

hotel, car rental). This has to be clarified in the operational part of the text. In this

regard, it should also be expressly stated that airlines selling travel combinations

be it packages or assisted travel arrangements, have to be insured against

insolvency96.

As Article 15.1 of the proposal, the current Directive already requires the guarantee

to be sufficient to cover the full costs of refund and/or repatriation of the

traveller, if transport is included97. Yet, it is a fact that almost no Member State

properly complies with this provision. In many countries the guarantees deposited

have proved insufficient and in some cases not even enough to compensate one

package travel98. Therefore we think this obligation should be accompanied by a

system to tighten the entrance to the market. Many Member States require a

licence which may be obtained by the tour operator only if he proves sufficient

insolvency insurance99. The introduction of such a license at European level should

be considered.

Besides reimbursement or repatriation, continuation of the started holiday

should be offered (where possible), at the choice of the consumer100. Finally, the

Directive should state that the rights of the consumer also apply if the insolvency

95 Recital 34 of the proposal. 96 See judgments Test-Achats v EasyJet, 29 September 2010 (Commercial Court o Namur) and UFC

Que Choisir v Air France, 26 April 2013 April 2013 (Tribunal de Grande Instance de Bobigny, Paris). 97 Case law: ECJ, C-140-97, Rechberger and others, 15 June 1999: the consumer is entitled, under

article 7 of the directive, to full compensation to cover his financial losses in case of insolvency of the tour operator; case law: ECJ C-354/96, Verein fûr Consumenteninformation.

98 In Germany the liability is limited, in clear contravention of the directive. In Greece, the amount of money that is required for a travel agency to issue a letter of guarantee in order to acquire its permit is €6.000 for agencies that operate at national level and €12.000 for agencies that operate at international level.

99 Examples for license requirements can be found in the laws of the United Kingdom, France, Italy, Czech Republic, Portugal, Slovakia or Slovenia among others.

100 This is current practise under the Belgian “Garantiefonds Reizen”.

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results from the fraudulent conduct of the company, as ruled by the Court of Justice

in 2012101.

Paragraph 1 of article 15 should be reworded by clearly stating the obligation to

provide insolvency protection applies both to packages and assisted travel

arrangements. The current wording could be interpreted as providing only

protection for assisted travel arrangements102.

Nonetheless, it is inconsistent that airlines will be obliged to offer insolvency

protection when selling travel combinations, whereas consumers who buy seat-only

tickets will be left stranded should the airline go bankrupt. Seat-only passengers

should also benefit from this protection103, otherwise discrimination among

consumers will continue in the travel sector104.

Existing studies and surveys show consumer confusion around the issue of

insolvency protection105. At European level, it was found that consumers buying

travel combinations different from traditional packages expect (often mistakenly) to

be protected against the insolvency occurrence106. This confusion is produced in

particular within the rapid development of new products and services in the travel

market, most of which were not anticipated when the Directive was adopted.

If the obligation to provide insolvency protection is not accepted or watered down,

restrictions on pre-payments should be considered107.

Mutual recognition of insolvency protection

BEUC supports Article 16 establishing the mutual recognition of insolvency

systems. The fact that the arrangements for insurance largely differ from Member

State to Member State leads to the fragmentation of the insurance market and

101 Case C-134/11: “Article 7 of Council Directive 90/314/EEC of 13 June 1990 on package travel,

package holidays and package tours is to be interpreted as covering a situation in which the insolvency of the travel organiser is attributable to its own fraudulent conduct”; in this case the travel organiser has used all the money collected from the travellers for an improper purpose and it was never intended that the trip would be organised.

102 Article 15.1: “Member States shall ensure that organisers and retailers facilitating the procurement of assisted travel arrangements…”.

103 The need for protecting air passengers against the insolvency of the airline was concluded in the latest study on insolvency protection of airlines: http://ec.europa.eu/transport/themes/passengers/studies/doc/2011_03_passenger-rights-airline-insolvency.pdf

104 See BEUC position on insolvency protection of airlines: http://docshare.beuc.org/Common/GetFile.asp?ID=41984&mfd=off&LogonName=Guesten

105 In a survey conducted in April 2013, our UK member found that only one in three surveyed knew when holiday companies must provide an ATOL certificate (in the UK this certificated tells consumers what protections they are getting with their purchase); 78% of those who said they knew wrongly thought they would get an ATOL certificate when they booked a hotel room only from a website. Two thirds said they should get one if they bought a flight and accommodation from an airline website.

106 80% of consumers who had taken dynamic package holidays believed that they are financially protected in the event of bankruptcy of one of the service providers (ref. study on consumer detriment in dynamic packages, 2009, page 129) ; 68% of consumers who bought travel combinations involving separate billings expect to be refunded or repatriated in case of insolvency of the seller or a service provider and 67% of consumers who bought the different elements of the combination at different times expected a refund in case of insolvency (Study consumer detriment, London Economics 2009, page 76).

107 In Austria for instance, the maximum deposit requested may not exceed 10 % or 20 %, whereby the remainder has to be paid 20 days before the start of the journey at the earliest.

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thereby of the package travel market with the consequence of a restriction of

competition detrimental to the interests of consumers108. Travel insurance valid

under the law of one Member State cannot always be sold in another Member

State109.

Even though we support the mutual recognition as a step in the right direction, we

are in favour of establishing a harmonised guarantee scheme in the EU. The

system should be inspired by best practices of some Member States. For instance,

the Austrian model requires a limited basic insurance combined with a fund,

which operates if the insurance proves not to be sufficient.

Liability for booking errors (Article 19)

We support the liability of retailers for errors occurring in the booking process. The

proposal establishes however that the responsibility of the retailer can be exempted

in the event of “extraordinary circumstances”. Yet, we do not see what kind of

circumstances could prevent the correct processing of a transaction. Therefore, the

reference to extraordinary circumstances should be deleted. In any case it

should be explicitly stated that if the error results in the consumer making an undue

payment, the excess will be reimbursed to him110.

Moreover, the right of the consumer to correct booking mistakes should be

acknowledged - mirroring the proposal amending Regulation 261/04111. The

consumer should be able to correct his own booking mistakes within 48 hours of

the booking.

108 Case law: ECJ, C-410/96, Ambry, 1 December 1998: “It is contrary to Article 59 of the EC Treaty and

to Second Council Directive 89/646/EEC…for national rules to require, with a view to implementing Article 7 of Council Directive 90/314/EEC of 13 June 1990 on package travel, package holidays and package tours, that, where financial security is provided by a credit institution or insurance company situated in another Member State, the guarantor must conclude an agreement with a credit institution or insurance company situated in France”.

109 This fragmentation runs counter to the demands in Article 23.2 of the Directive on Services in the Internal Market (Directive 2006/123/EC) which states that the provider of cross-border services shall not be requested to take another guarantee when he is already insured in a Member State and the guarantee coverage is comparable to that required in the Member State where the service is to be provided.

110 Real case examples → Hotel bookings → A consumer booked a room through a web portal; as he did

not receive the confirmation having waited 24 hour, he booked another room; arriving at the hotel the consumer had to pay two rooms for the same day. In Greece various cases were reported in which consumers booked a room through a website and the booking was not transferred to the hotels. When consumers arrived at the hotel, the hotel claimed no rooms were booked.

111 Real case examples → Car rental via on line platform (Expedia) →A consumer booked an airline ticket

through Expedia. In the booking process, the consumer mistakenly entered the wrong names (not the exact names as in the passport). The airline said it was easy to correct this, but that only Expedia could give them that order. Expedia however refused to do so, and told the consumer the only option was to cancel the tickets (of course against cancellation costs) and buy new tickets.

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Relationship with the Consumers Rights Directive

BEUC welcomes Article 25 of the proposal as it incorporates in the proposal a

number of consumer rights and safeguards excluded from the Consumers Rights

Directive (CRD) for package travellers112:

- safeguards against internet traps: an obligation on the trader to explicitly

inform the consumer of the obligation to make a payment113;

- prohibition on excessive fees for using electronic payment means (credit card

extra charges)114;

- right of the consumer to contact the seller by telephone at the basic rate

(prohibition of high rate telephone lines)115;

- Prohibition of pre-ticked boxes for additional services on websites or forms116.

According to this Article 25, ATAs would be fully covered by the 2011 CRD117 which

we support in principle, whereas package travel is excluded except for a few specific

provisions (the list above). Yet, the CRD itself excludes transport sector contracts

(and so most combinations facilitated by sellers of ATAs). Therefore, the extent to

which retailers of ATAs are obliged under the CRD obligations is far from clear and

would sometimes be inexistent. Important elements, such as pre-contractual

information and specific protection in case of off-premises and distance selling

shopping, including the right of withdrawal, are missing.

Right of withdrawal

When purchases are made at a distance or off-premises, it is necessary to grant

consumers a right of withdrawal. In relation to off-premises contracts such a right

was excluded in the Consumer Rights Directive for package contracts118 and thus it

has to be introduced in the new Package Travel Directive.

We advocate a right of withdrawal for early bookings made at a distance (e.g.

online), as a solution which would not interfere in the capacity policy of the service

providers. At the least, consumers should be allowed to cancel the contract

within 48 hours of the booking. As regards off-premises contracts, the rule in

the CRD should apply to packages and ATAs i.e. 14 days after the conclusion of

the contract119.

END

112 Directive 2011/83/EU of the European Parliament and of the Council of 25 October 2011 on

consumer rights amending Council Directive 93/13/EEC and Directive 1999/44/EC of the European Parliament and of the Council and repealing council Directive 85/577/EEC and Directive 97/7/EC of the European Parliament and the Council.

113 Article 8.2) of the CRD. 114 Article 19 of the CRD. 115 Article 21 of the CRD. 116 Article 22 of the CRD. 117 See article 25 of the proposal. 118 While the directive on door-to-door selling included118 this right also for packages. 119 Article 9 of the Consumer Rights Directive.